15 March 2016
Transcript - #2016032, 2016

Interview, CNBC

SUBJECTS: Backing Australians in our transitioning economy; rising level of consumer confidence in the economy

QUESTION:

Thanks so much for chatting to us. Of course risk takers are growth makers – how is Australia going to be a risk taker to of course revive pre-crisis growth levels?

TREASURER:

Well, we are growing at 3 per cent real a year. This puts us ahead of all of the G7. It puts us well above the OECD average and is up there with countries like South Korea and twice the growth rate of countries like Canada. So, Australia, in what is a globally volatile and uncertain time, is really performing comparatively very well. Our long term growth rate is not much about that 3 per cent. So, our economy is transitioning. It is well synchronised with what is happening in China. I don’t think that is an issue that is well understood globally. We are not part of that group-think about what is happening in China because our level of engagement is deeper and is more sophisticated.

QUESTION:

In those growth figures that you mentioned we of course saw a rebalancing starting to really see that gain traction. How much longer is it going to take for the Australian economy to rebalance away from the mining-led investment hangover, I guess, to domestic consumption?

TREASURER:

Well, our terms of trade are coming back now to about their long run average so we have seen the [30 per cent] fall off the peak from that and we are seeing the transition, as you say, take place. Our services exports are up over 8 per cent, our growth in employment is up 300,000 which for us is the biggest since the calendar year 2006. So, the growth we are getting in this phase of our transition is much more job intensive. During the mining investment boom you have a lot of investment going but the number of jobs per dollar investment was obviously not as great as what we have seen now in the services sector with [strong jobs] growth. So, we are continuing to go through what is a very positive transition. You asked me about risk takers earlier. Now, with risk takers they are the ones who are out there actually driving a lot of this transition. The Australian consumers, I think, are proving defiantly resilient in their confidence. Confidence levels in our economy is up almost 10 per cent since the change of leadership last year. So, we are seeing good signs, people are backing themselves in and it is our job to back them in in the policies we have, whether it is for angel investors that we have announced with capital gain tax exemptions on start-ups and things like that and engaging the FinTech side of things because we really believe that can, not only transfer the global economy but it can help transform ours as well.

QUESTION:

I want to talk to you very quickly about the iron ore price that we have seen back above $60 over the last couple of weeks. That is obviously going to provide a bit of a tail wind for your upcoming Budget in about two months’ time?

TREASURER:

Well, these things are swings and roundabouts. What you gain in one area is often off-set by others. So, we are not getting ahead of ourselves of what the impact of that might be. There are a lot of factors playing on that at the moment. Some of them are very, very, very short term. So, we have got to see what’s the enduring position on those movements. The fundamental issue that we have to focus on is to continue to drive growth and to drive growth you have got to drive investment. You have got to be able to back in with the sort of tax policies necessary to get people to say yes to new investment because their balance sheets in this country are a lot stronger. Their household balance sheets are quite strong as well. People are paying forward on their debts and things like this. So, that confidence is really critical and the Budget in May will be an important step in backing that confidence in.

QUESTION:

Thank you so much for joining us.

TREASURER:

Great to be with you.